More questions than usual as we await Pritzker’s budget

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No, it won’t include an increase in Illinois’ flat income tax. We also know that for the second year in a row, general state aid frozen for public grade and high schools.

But there are plenty of questions about what will and won’t be in the state budget Gov. J.B. Pritzker is scheduled to unveil in a remote speech at noon tomorrow.

Among the key ones: Which “corporate loopholes” are on the closing list that the governor says will net the state $900 million a year, whether a recent uptick in revenue is sustainable, how the state will repay more than $2.3 billion it borrowed from the Federal Reserve and whether the state’s workforce will be asked to shoulder any pain in a very difficult budget year.

“It’s really very hard to see how they close a (projected) $3 billion hole without more revenues,” says Civic Federation President Laurence Msall. Beyond that, with considerable doubt about whether the state will be getting more help from Joe Biden’s Washington, a variety of state programs and aid to local governments could be on the block, he says.

What’s known for sure is that Pritzker, now just a year before his presumed re-election race, will unveil a spending plan likely to be in the range of this year’s $42.8 billion.

In an announcement last week, Pritzker said the size of the hole has been cut from $5.5 billion to about $3 billion because local tax revenues have performed better than expected—even without billions from his defeated graduated income tax. He also said he will not push for a hike in the state’s income tax, that general spending for schools and other needs will be held at this year’s levels, propose closing $900 billion in business tax breaks and continue many of the $700 million in spending cuts he implemented in fiscal 2021 into the year that begins July 1.

However, it’s not clear yet how much of that improved revenue performance is real and how much is one-time factors, like late payment of income taxes that were deferred a year ago as the COVID-19 pandemic hit.

Some conservative groups such as Wirepoints argue the money is so real that the state no longer needs what it would get from Biden’s proposed $1.9 trillion federal COVID relief bill. According to U.S. Rep. Raja Krishnamoorthi, D-Schaumburg, who heads a subcommittee that already has advanced part of Biden’s plan, Illinois and local governments in the state are in line for a combined $13.2 billion.

It’s uncertain, though, how much of that is for COVID-related spending and how much for general aid, which would most help Pritzker’ budget. Either way, Msall said, the state “clearly needs revenue support,” if not from Biden, from some other source.

Illinois House Republicans, meanwhile, have lots of questions about exactly where those $700 million in spending cuts came from.

In a conference call with reporters today, they also underlined that with COVID easing, they want to see an end to emergency procedures in which lawmakers ceded much of their normal appropriations and spending oversight powers to the governor.

Pritzker also will have to detail how he’d fill a hole of up to $1 billion caused by a section in an earlier COVID bill that helps business but hurts the state’s bottom line by expanding the use of loss carry-forward and carry-back provisions. He’ll have to lay out whether state employees will be asked to take unpaid furlough days or other cuts as some states have ordered, and whether hundreds of millions of dollars in cigarette tax revenues he’s diverting to the state’s operating account from infrastructure will slow down such projects.

One more big unknown is how Pritzker will get along with the new House speaker, Emanuel “Chris” Welch. The governor got almost everything he wanted in his first year from former Speaker Mike Madigan, but Madigan historically gave rookie governors what they wanted in their first year or two. How Welch will handle things is not known.

Bottom line: More questions than usual surround this budget, lots of them. Mix in a new president and a new election and lots could happen.

via Crain’s Chicago Business https://ift.tt/1mywUHL

February 16, 2021 at 04:27PM

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